What is MACD?
MACD (Moving Average Convergence Divergence) shows the relationship between two exponential moving averages. It consists of:
- MACD Line: 12-period EMA minus 26-period EMA
- Signal Line: 9-period EMA of the MACD line
- Histogram: Difference between MACD and Signal
Signal Crossovers
Bullish crossover: MACD crosses above the signal line → buy signal
Bearish crossover: MACD crosses below the signal line → sell signal
Zero Line Cross
When MACD crosses above zero, the short-term average is above the long-term — confirming an uptrend (and vice versa).
🤖 How Our AI Uses This
Momentum Mike's primary signal: MACD crossover combined with RSI confirmation. When MACD crosses bullish AND RSI is rising from below 50, Mike enters with high confidence. The histogram slope tells him if momentum is accelerating.
Key Takeaways
- MACD measures momentum via EMA relationships
- Crossovers generate buy/sell signals
- Histogram shows momentum acceleration/deceleration
- Best in trending markets, less useful in sideways chop